Disney Purchases YouTube Network Maker Studios for $500 Million

Disney announced that it will purchase the YouTube network Maker Studios for $500 million. The deal marks the latest development in the ongoing combination of traditional media and entertainment outlets with up and coming formats such as YouTube. It also highlights Disney’s continuing efforts to expand its reach and acquire new properties. It is the largest purchase by Disney since the company acquired Lucasfilm in 2012. The deal already stands as the largest payment for a YouTube based content provider, but the deal could prove to be even larger. It calls for Disney to pay up to an additional $450 million if Maker meets certain performance targets.

The deal combines some of the most familiar brands in entertainment with some of the most popular names in the YouTube space. Disney is known for not only its own famous cartoon properties, but now the aforementioned Lucasfilm properties, as well as several Marvel franchises. Household names like Mickey Mouse and Darth Vader will now find themselves side by side with “titans” of YouTube such as PewDiePie and the Epic Rap Battles of History. PewDiePie has the largest number of total subscribers of any channel on YouTube. He is known mostly for videos commonly referred to as “Let’s Play” where he plays a video game for his viewers to watch.

Business analysts suggest that the deal is not so much about Disney acquiring Maker’s popular properties. As noted above, Disney does not lack for content. Instead the deal is designed to allow Disney to take advantage of Maker’s expertise in the growing digital space. Maker manages nearly 55,000 individual YouTube channels. These channels total over 5.5 billion views in an average month and Maker claims over 380 million subscribers. Among those channels are some of the most popular in the digital space, including the aforementioned PewDiePie. As one digital media expert noted, “Imagine what they can do for Iron Man, Mickey, and Yoda.” This is why Disney purchased Maker Studios for $500 million.

The deal is the latest indication that digital media is coming of age and that more “traditional” entertainment companies are taking notice. The growth of YouTube over the past few years has, in particular, attracted the notice of companies like Disney, Time Warner, DreamWorks, and others. Time Warner invested in the video game focused network Machinima, and DreamWorks acquired the AwesomenessTV network. “Short-form videos,” which is the category that most YouTube content falls into is rapidly becoming one of the most popular in the digital space. Disney is looking to capitalize on that trend by bringing its household names into the digital space and into the “short-form video” format.

The deal is the largest to date, but if recent history is any indication, it may not hold that distinction for long. Traditional media and entertainment companies continue to watch the digital space with increasing interest and an eye on expanding their reach and opportunities. If the Maker deal pays dividends for Disney, it is likely other companies will continue to follow into the digital space looking to create new opportunities of their own. Many other eyes were likely watching as Disney purchased Maker Studios for $500 million.